E4-12 (LO 6) Retained Earnings StatementEddie Zambrano Corporation began operations on January 1, 2017. During its first 3 years ofoperations, Zambrano reported net income and declared dividends as follows.Net IncomeDividends Declared2014$40,000 $2015125,00050,0002016160,00050,000The following information relates to 2017.Income before income tax$ 240,000Prior period adjustment:understatement of 2015 depreciation expense (before taxes)25,000Cumulative decrease in income from change in inventory methods,(before taxes)35,000Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2018)100,000Effective tax rate40%Instructions:(a) Prepare a 2017 retained earnings statement for Eddie Zambrano Corporation.Calculation of net income for 2017:Income before income taxIncome taxNet incomeCalculation of beginning retained earnings:Net IncomeDividends Declared201420152016Beginning retained earnings: